Events haven't been kind to rutile miner Sierra Rutile (SRX). A slide in the price of rutile - a popular source of white pigment titanium dioxide - explains the chunky first-half loss. Moreover, with the group's operations located in Sierra Leone, the West African ebola epidemic has weighed on sentiment. The shares have fallen a third since the outbreak began making news in late July.
The average rutile price slumped a third to $855 (£528) per tonne. An 8 per cent hike in production to 56,060 tonnes - and a 34 per cent rise in rutile sales volumes to 71,565 tonnes - only partially offset that pressure. But progress has been made with cutting unit costs, with total all-in cash costs falling 26 per cent to $627 per tonne. That's not far off management's full-year guidance of $605 per tonne.
Meanwhile, investors still await a detailed update on plans for developing the Gangama dry mining project, which could potentially produce 93,100 tonnes of rutile a year. Finance director Yves Ilunga says that Gangama has the potential to substantially cut the group's unit costs. A decision on taking the development forward could be made within six months.
RBC Capital Markets expects full-year EPS of 1¢, from 2¢ in 2013.
SIERRA RUTILE (SRX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 34p | MARKET VALUE: | £177m | |
| TOUCH: | 33-35p | 12-MONTH HIGH: | 73p | LOW: 33p |
| DIVIDEND YIELD: | nil | PE RATIO: | 138 | |
| NET ASSET VALUE: | 37¢ | NET DEBT: | 17% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 66.4 | 3.8 | 0.7 | nil |
| 2014 | 64.1 | -3.8 | -0.8 | nil |
| % change | -3 | - | - | - |
Ex-div:- Payment:- £1=$1.62 | ||||
